EU seeks to transform procurement into €600B driver of industry
A streamlined rulebook would set clearer guidelines for public authorities — giving a higher weighting for “quality” against cost.
The European Union is aiming to turn public procurement into a major driver of industrial policy by redirecting billions of euros spent on infrastructure, schools, energy, and health services towards European businesses. In a new Public Procurement Act unveiled by the Commission, Ursula von der Leyen's administration is addressing recommendations from economic reform expert Mario Draghi to bolster struggling European industry and protect the bloc from external risks.
Public procurement accounts for up to 15% of the EU's GDP, or around €2.5 trillion annually. Around €600 billion of this is governed by EU rules, according to Executive Vice President Stéphane Séjourné. This represents an annual recovery plan and spending equivalent to 4-5 times the EU budget.
The Commission promises annual cost savings of €650 million for public authorities by consolidating three old directives and 24 sectoral laws into a single regulation of just 200 pages, aligning with von der Leyen's broader agenda of reducing red tape through administrative reforms.
To maximize the strategic benefits of public procurement, the EU executive is emphasizing quality as the main driver in awarding public tenders. Public authorities would be required to assign a minimum quality weighting of 30%, rising to 50% for labor-intensive contracts. Environmental, social, innovation, security, and resilience considerations would all be considered quality criteria. Authorities can still prioritize price if they can justify that the quality is guaranteed through technical specifications.
The proposal also aims to increase the use of EU goods and services by allowing authorities to restrict participation, impose origin requirements, and reject tenders where EU or "covered" content accounts for less than 50% of the tender's value. The Commission hopes this will provide greater clarity on EU preference rules, enabling authorities to evaluate European bids more effectively and exclude bids from non-covered countries if necessary.
The procurement bill is described as a "radical simplification" act. The Commission chose a regulation over a directive to minimize divergent national transposition and avoid "gold-plating" by governments. The Public Procurement Act will introduce a network of digital platforms to make it easier for companies to find and participate in tenders across the EU, simplifying procedures and reducing them to two: a standard open procedure and a dynamic procedure.
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